Global dividends hit a record in the second quarter, boosted by big banks that accounted for half the growth.
Second-quarter dividend payouts rose 4.9% globally to $568.1 billion, according to the latest version of the Janus Henderson Global Dividend Index. The asset manager’s quarterly index tracks dividends paid by 1,200 companies around the world. Globally, 88% of companies either increased dividends or held them steady in the second quarter, the report said.
From a sector perspective, bank dividends were strong globally and accounted for half the global growth in the quarter as rising interest rates boosted margins and pandemic-related disruption to dividend payments finally worked its way out of the numbers, Janus Henderson said.
Auto manufacturers also helped boost dividend growth.
Dividends paid by U.S. companies rose a modest 2.6% to $148 billion, helped by healthcare and real estate firms. It was the sixth straight quarter of slowing U.S. dividend growth. But Janus Henderson noted the slowdown “comes after a period of exceptional resilience during the pandemic when other parts of the world saw steep cuts.”
The firm noted that 98% of U.S. companies either raised their payouts or held them steady during the quarter, well above the global average.
Healthcare companies were the biggest drivers of growth in the U.S. in the second quarter, led by
UnitedHealth Group
(ticker: UNH) and
Eli Lilly
(LLY).
In July,
UnitedHealth Group
posted better-than-expected earnings and raised its outlook for the rest of the year. And earlier this month, Lilly beat revenue estimates for the second-quarter and increased guidance for full-year non-GAAP earnings.
Janus Henderson said the two biggest dividend cuts in North America came from
Intel
(INTC) and
Blackstone
(BX).
Overall Janus Henderson said the second quarter was strong for dividend payments, but warned economic growth is moderating in response to higher interest rates.
“Markets now expect global profits to be flat this year, after soaring to record highs in 2022, and companies around the world are now more cautious about the outlook,” said Ben Lofthouse, head of global equity income at Janus Henderson.
Looking ahead, the firm still expects good dividend growth this year, up 5.2% on a headline basis to $1.64 trillion, equivalent to underlying growth of 5.0%.
“Most regions and sectors are delivering dividends in line with our expectations. We believe the banking sector in particular will continue to deliver solid growth for the rest of the year, making record payments to shareholders.”
Lofthouse said a weaker economic environment is typically negative for banks, but the positive effect on bank margins from the end of years of ultralow interest rates “is very powerful and is driving dividend payouts.”
Dividends are a bedrock in many portfolios, but have fallen out of favor with some investors who see more promise in growth-focused tech stocks that don’t typically pay them. Dividend-paying companies are also competing for a share of investor wallets from attractive yields on government bonds.
Write to Lauren Foster at [email protected]
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